2019 (1) TMI 90 - AT - Income Tax

Rejection of approval of assessee u/s 80G - non specification of reasons for rejection of approval - denial of natural justice - Held that - order of the ld. CIT(Exemptions) is not a speaking order, as the said impugned order does not deal with the merits of the assessee s case. How and why the assessee s case is not fit for approval u/s 80G of the Act, has not been dealt with by the Ld CIT (Exemptions). Therefore, we consider it a gross negligence on part of the CIT(Exemptions), as he did not bother to bring on record the cogent evidence and the material to prove that the assessee s case is not fit for approval u/s 80G of the Act. Therefore, without bringing any cogent evidence on record and to reject the assessee s application for approval u/s 80G of the Act is nothing but violation of principles of natural justice - Decided in favour of assessee.

Summary

Issues:
Appeal against rejection of approval u/s 80G of the Income Tax Act by ld. CIT(Exemptions) Kolkata.

Analysis:
1. The appeal was filed against the order of the ld. Commissioner of Income Tax (Exemptions) Kolkata rejecting approval of the assessee u/s 80G of the Income Tax Act, 1961. The assessee trust, M/s. ABCI Charitable Trust, came into existence on 09.10.2015 and applied for approval for exemption u/s 80G on 30.11.2016. The ld. CIT(Exemptions) rejected the approval citing that it was not a fit case for approval under section 80G without providing substantial reasons for the decision.

2. The assessee raised several grievances in the appeal, including the contention that the order rejecting approval u/s 80G was bad in law, the CIT did not provide a reasonable opportunity of being heard, and failed to pass a speaking order with proper reasons for rejection. The counsel for the assessee argued that the registration of the Trust under section 12A was not cancelled, yet the application under section 80G was rejected without justification.

3. Upon careful consideration of the submissions, the Appellate Tribunal noted that the order of the ld. CIT(Exemptions) was a non-speaking order as it did not discuss the case with the Authorized Representative of the assessee or provide any valid reasons for denying approval under section 80G. The Tribunal found the order to be against the principle of natural justice as it lacked reasoning and evidence to support the decision.

4. Referring to a judgment of the Coordinate Bench of Kolkata Tribunal in a similar case, the Tribunal highlighted that rejection without assigning reasons or bringing cogent evidence on record violates the principles of natural justice. The Coordinate Bench had directed the CIT(Exemptions) to grant registration under section 12A and approval under section 80G in that case. Therefore, considering the facts and circumstances, the Tribunal directed the ld. CIT(Exemptions) to grant approval u/s 80G of the Act in accordance with the law.

5. Consequently, the appeal of the assessee was allowed, and the order was pronounced in court on 03.10.2018. The Tribunal's decision emphasized the importance of providing reasons and evidence when rejecting applications under the Income Tax Act to uphold principles of natural justice and fairness in the decision-making process.